FLOWOOD, Miss. (AP) — Mississippi Gov. Tate Reeves said Tuesday that legislators should ignore “myths” from opponents who want to block efforts by him and some other Republican leaders to phase out the state’s income tax.
“Getting rid of our state income tax, in my opinion, is the next step in continuing to unleash our full economic potential,” Reeves told a few hundred businesspeople, lobbyists, legislators, and other elected officials at a conference in the Jackson suburb of Flowood.
Republican House Speaker Jason White set the daylong meeting for people to discuss potential tax cuts that the GOP-controlled state House and Senate could debate during the three-month legislative session that begins in January.
Mississippi, which has long been one of the poorest states in the U.S., is in the process of reducing its personal income tax under a law Reeves signed in 2022. The state will lower its top rate to 4% in two years.
In July, Republican Gov. Sarah Huckabee Sanders of Arkansas signed legislation that will reduce her state’s income tax to 3.9%. Reeves has long said that Mississippi should eventually eliminate its income tax to compete with Florida, Tennessee, and Texas, which don’t levy the tax.
Mississippi collected almost one-third of its general fund revenue from the individual income tax during the budget year that ended June 30, 2023, according to the state Department of Revenue. Only the sales tax is a larger source of money.
“I am going to dispel the myths that our opponents are going to spread trying to stop us from eliminating the income tax,” Reeves said.
Critics will say that cutting taxes won’t lead to more jobs, and that cuts will make it harder for the state to fund public education and balance budgets, the governor said. He said all three points are wrong.
Reeves pointed to job announcements earlier this year, including one that Amazon Web Services will build two data centers in central Mississippi. He also said Mississippi has improved its high school graduation rate and has had substantial budget surpluses.
White on Tuesday repeated his often-expressed support for phasing out the income tax. He also said he wants to cut in half the state’s 7% sales tax on groceries, “as soon and as quickly as we can.”
Two Republican senators, Jeremy England of Vancleave and Finance Committee Chairman Josh Harkins of Flowood, said legislators should be cautious in considering big changes to taxes because the state has to pay for obligations such as the Public Employees Retirement System and the maintenance of public buildings.
England pointed to Kansas, which enacted big tax cuts in 2012 and 2013 but repealed most of them in 2017 after revenue fell short.
“We don’t want to end up in a situation where we’ve gone too far,” England said.
House Ways and Means Committee Committee Chairman Trey Lamar, a Republican from Senatobia, said Mississippi could grab attention by enacting a “transformational” phase-out of the income tax.
“That money belongs to the taxpayers of the state of Mississippi,” Lamar said. “And it’s time for the state of Mississippi to do something big.”
